BUSINESS IN BRIEF 20/5 First Vietnamese business receives GTB Innovation Award FPT Information System Corporation (FPT IS) was honoured at the 2014 Global Telecoms Business (GTB) Innovation Awards during the annual ceremony on May 16. The GTB Innovation Awards, which celebrate innovative projects involving global telecommunications operators and their suppliers and vendors, were held in London and this is the first time Vietnamese company has been named a winner at the awards. In the Business Service Innovation category, FPT IS won a 2014 Innovation Award for creativity and innovativeness in the development of a customer management and marketing computer software package designed specifically for a project in Laos. FPT IS Global General Director Le Anh Tuan said the award is a tremendous honour affirming the creative capacity and IT qualifications of the company’s engineers and employees. It also affirms the company’s commitment to producing high-quality Made-In-Vietnam products and services, he added. FPT IS has been developing software since 1999 and its products and sales have been gaining international recognition since inception.  Its software products are now being used efficiently and effectively in Vietnam and numerous other countries around the globe. Total cumulative revenues have surpassed US$14 million and are forecast to reach US$200 million as the company expands its horizons into foreign markets such as the US, the EU, Singapore, Laos, Myanmar and Cambodia over the next few years. Trade surplus rises to over US$2 billion Vietnam enjoyed a US$2.05 billion trade surplus in the first four months of the year, the General Statistics Office of Vietnam (GSO) announced on May 15. Overall, exports in the first four months notched up 18.9% year-on-year to US$46.51 billion while imports jumped up 12.2% to US$44.46 billion. The trade surplus outpaced by nearly three-fold the figure of US$683 million previously estimated by the Vietnam Ministry of Planning and Investment. The country’s exports in April alone climbed to US$13.07 billion while imports tallied US$12.26 billion, creating a trade surplus of US$810 million for the month. Foreign direct investment (FDI) enterprises continue to account for the high growth in exports. They grossed US$28.94 billion in revenue for first four months, a year-on-year increase of 23%, comprising more than 62% of the country’s total exports. Exports to Israel nearly double Vietnamese exports to Israel nearly doubled in the first four months of 2014 when compared to the same period last year, according to the General Department of Customs. For the first quarter of the year, exports totaled US$172 million, up 93%, consisting principally of seafood, garments and textiles, foot wear, coffee, cashew nuts, and mobile phones and components. The export volume of mobile phones and components reached US$73 million in the first three months, skyrocketing up 112% year-on-year and accounting for 57% of the country’s total exports to the Middle Eastern country. However, according to market analysts at the Africa, West Asia and South Asia Market Department under the Ministry of Industry and Trade, Israel remains largely an untapped market by Vietnam business enterprises. Int’l cashew nut processors convene in Ba Ria-Vung Tau Ba Ria-Vung Tau province on May 16 hosted an international conference attended by more than 250 leading cashew nut processors from 40 countries around the globe. Participants at the conference were in general agreement that the cashew nut industry will face a number of challenges in the future, largely attributable to increased and fierce competition. Processors who fail to pay due attention to improving the qualitative competitiveness of their products and processing capacities, are bound to suffer from the financial pressures as their market shares dwindle away  to the more quality oriented companies. International Nut and Dried Fruit Council Foundation (INC) Vice President Pino Calcagni said Vietnam should further improve the quality of products because producing high quality products in the globalization process, will facilitate the penetration of the more demanding markets, bringing higher profits. Pham Van Cong, Nhat Huy Joint Stock Company’s CEO, said if Vietnam continues to export unprocessed raw cashew nuts, expecting to compete solely on price, the cashew nut sector will stay on the same dead end path as other agricultural sectors because they have not adequately prepared added value materials for export. The sector needs assistance from relevant agencies to build a sustainable development strategy for the future, he added. To promote and expand export markets, the Vietnam Cashew Nut Association has organized a series of meetings and dialogues providing domestic and foreign processors opportunities to expand cooperation. Last year, Vietnam exported more than 261,000 tonnes of cashew nut, earning US$1.65 billion, up nearly 18% in volume and 12% in value. Major markets included the US, China, and the Netherlands. This is the eighth consecutive year Vietnam has surpassed India to become the world’s largest cashew nut exporter. This year, the cashew nut sector aims to fetch around US$2 billion from exports. DongA Bank receives Bank of Mellon’s award Bank of New York Mellon (BNY Mellon) recently conferred its prestigious ‘Excellence Award for 2013’ on DongA Bank for its global leadership in designing a capital market and payment transactions system. The system named – Straight Through Processing (STP) – allows transactions to be completed electronically without the need for re-keying or manual intervention. In a statement released by BNY Mellon, a spokesperson applauded the bank for its contributions to the banking industry, stating it actively supports DongA Bank in training, contributing to raising the professional skills of banking staff. HCM City drives auto co-operation with Japan HCM City is seeking support and cooperation with Aichi prefecture of Japan in auto manufacturing, as the locality is seen as Japan's centre of the auto industry. Vice Chairman of the HCM City People's Committee Le Manh Ha was speaking with visiting Aichi Governor Ohmura Hideaki and businesses on May 18. Ha said he hopes that businesses from Aichi will gain more information and increase their investment in the city. About 500 Japanese businesses are operating in the city, with total capital of about US$2 billion. Two-way trade between HCM City and Japan reaches nearly US$4 billion annually, Ha said, adding that the city welcomes over 300,000 Japanese visitors each year. On this occasion, Ha expressed thanks to Japan in general and Aichi prefecture in particular, for their contributions to his city's construction and development process. He cited the East-West Avenue project, including Thu Thiem tunnel, which uses official development assistance (ODA) from Japan, as a bright example of successful cooperation between the two countries. For his part, Ohmura Hideaki said Aichi hopes to further enhance ties with HCM City, and Vietnam at large. Aichi pays attention to investing in Vietnam and creates conditions for small and medium-sized enterprises to seek cooperative opportunities in HCM City. Aichi Governor Ohmura Hideaki committed to the expansion of cooperation between the two localities in industrial production, tourism and education. Attracting foreign investment into agriculture Measures to reverse the dwindling attraction of foreign direct investment (FDI) into agriculture was the focus of a seminar in Hanoi on May 19 held by the Ministry of Agriculture and Rural Development (MARD). It was reported that though FDI into a number of industries in Vietnam over the past 20 years such as construction, tourism and hi-tech fields, has been steadily rising, investment in agriculture has been flagging. In 2001, FDI in agriculture accounted for 8% of the country’s total, and the figure slowed to just 1% a decade later. There is uneven capital distribution, with priority given to livestock breeding, feed processing, forestation, and forest product processing. The primary reasons cited for lack of investment were that investors are highly concerned about the high risk of natural disasters, epidemics, low profits, and slow capital recovery. In addition, experts attributed the fall in FDI in agriculture to the sector’s unclear development strategy and FDI attraction promotion plans. The seminar provided an opportunity for professionals, managers and businesses to work out measures to improve the mechanism of credit, land, and technology, along with efforts to lure FDI strongly in agriculture and maximize the potential of this sector in the future. Vietnam attends Int’l fair in Sri Lanka A large number of Vietnamese businesses attended an international industrial trade fair taking place in Sri Lanka from May 16-18. On display at the Vietnamese booths were high-quality products including tea, lighting equipment, household electrical appliances, batteries, food, and handicraft items. Publications promoting Vietnam’s land and people, along with an overflowing variety of documents on the country’s economy, culture, tourism and the relationships between the two nations were also on exhibit. Located in the center of the fair, Vietnamese booths are getting much exposure and are attracting huge numbers of attendees, interested in trade and cooperation opportunities and learning more about the country. Within the framework of the event, the Vietnamese Embassy held a meeting between Vietnamese and Sri Lanka enterprises, helping the two business communities to seek cooperation partners and expand their markets. Vietnam targets more FDI with new legal framework Vietnam plans to improve its legal framework to create a favourable investment environment and help the state better manage these activities, said an official from the Ministry of Planning and Investment (MPI) at a recent seminar in Hanoi. Since economic reforms began in 1986, FDI has played an important role in international integration and economic development, MPI Deputy Minister Dang Tien Dong said at the seminar. After Vietnam entered the World Trade Organisation (WTO), FDI soared, but in 2011, registered FDI saw a year-on-year drop of 21.6% to US$15.6 billion and disbursement of FDI reached only US$11 billion–the same level as in 2010. Registered FDI in 2012 rose 4.8% to US$16.35 billion while disbursement of FDI dropped to US$10.46 billion. There was a recovery in 2013 with total registered FDI of US$22.35 billion, 36.7% higher than in 2012. Disbursement of FDI also increased 9.9% to US$11.5 billion. However, many experts said the recovery was not sustainable and growth in Vietnam was lower than other regional countries. In the first four months of this year, FDI fell 41% to US$4.85 billion, whereas disbursement of FDI continued to grow by 6.7% to US$4 billion against the same period last year. Additionally, almost all FDI projects in Vietnam are small and medium scale. FDI projects with capital of US$100-500 million accounted for only 1.51% of the total, while those with capital of between US$500 million – US$1 billion accounted for 0.19% and those with over US$1 billion accounted for barely 0.2%. Do Nhat Hoang, director of the Foreign Investment Agency, said that although Vietnam has a strict licensing process for FDI, management of operations is not strict enough. He suggested the country should reform administrative procedures, improve infrastructure, develop the support industry and focus on training a high-quality workforce. He noted Vietnam faces challenges in wooing investors, competing with regional and global rivals and simplifying administrative formalities. To improve the investment climate and State agencies' capacity to manage foreign capital, participants agreed that obstacles in the way of investment procedures should be examined. Director of the Central Institute for Economic Management Nguyen Dinh Cung stressed it is vital to restrict the withdrawal of business permits, adding that relevant agencies should only revoke the permits when necessary. Chairman of the Vietnam Association of Foreign Invested Enterprises (VAFIE) Nguyen Mai said that various difficulties in managing foreign direct investment (FDI) enterprises would emerge if regulations on the establishment of such firms, especially those related to fields of business and minimum capital, were not specified. Vietinbank report reveals bad debt increase Vietinbank's bad debts reached about VND6.3 trillion, or US$300 million, on March 31, an increase of 67 per cent over the end of last year, according to the bank's latest report released last week. As the largest commercial bank of Viet Nam, Vietinbank posted the debt figure in its first quarter financial report. The bad debts represented 1.78 per cent the bank's total outstanding loans, rising from 1 per cent at last year-end, but remaining secure, it said. Deposits declined 2.8 per cent and credits fell by 5.86 per cent over the first quarter, both reaching over VND354 trillion, or $16.86 billion. The total asset value was down 3 per cent at VND558.78 trillion, or $26.61 billion. Net revenues dropped 9.1 per cent over the same period last year, reaching VND4.22 trillion, or $200.95 million. Most business activities generated profits, except for securities investments suffering a loss of VND5 billion, or over $238,000. With risk provisional funds declining nearly 24 per cent year-on-year, pre-tax profits increased 8 per cent to reach VND1.46 trillion, or $66.52 million. After-tax profits totalled VND1.14 trillion, or $54.28 million. In August 2013, VietinBank received approval from the State Bank of Viet Nam (SBV) to raise its charter capital from VND32.661 trillion ($1.55 billion) to VND37.234 trillion ($1.76 billion) through issuing new shares to existing shareholders. According to the VNR500 (Top 500) ranking, Vietinbank is Viet Nam's 13th largest company. High-tech agriculture needs funding The application of high technologies was vital for the development of agriculture, as it was entering a new stage, stated Minister of Agriculture and Rural Development Cao Duc Phat. Phat announced at a conference on Thursday that Viet Nam's agriculture sector was moving towards larger production scale and higher value-added agriculture. "To do so, high-tech agriculture is necessary, which will increase competitiveness and better meet consumers' demand, particularly for export," he added. Head of Agriculture Department under Party Central Committee's Economic Commission, Nguyen Van Tien, stated that during the past, high-tech agriculture had yet to create a breakthrough in restructuring the sector and increasing value-added agriculture. "More investment and support policies in developing sciences and technologies for agriculture are required," he noted. For years, investment in agriculture was not in line with the contribution agriculture made for gross domestic production (GDP). In 2012 alone, agriculture made up to 19.7 per cent of GDP, but investment in the sector only accounted for five per cent of the government's total investment. Tien stated that financial incentives were required to encourage research institutions and public and private sectors to join in the high-tech development of agriculture. Director of Viet Nam Chamber of Commerce and Industry branch in southern Can Tho City, Vo Hung Dung, stated that Vietnamese agricultural products had low added value because for a long time, focus was on production stage rather than market study and consumption stage. For example, when growing rice, Viet Nam sold rice as the only output, but rice husk could have been useful for many industries including energy. "Now is the time we must pay more attention on market study and then invest technologies that help to provide products that meet consumers' demands," he noted. Director General of Da Lat Flower Biotechnology Joint Stocks Company, Nguyen Dinh Son, stated that the company hardly had access to middle-term loans, so it could not invest and upgrade technology synchronously. He added that now, the company could access short-term loans. He recommended that State Bank should allow borrowers to mortgage with asset that was formed with the loans. According to him, the collateral should be the glasshouse, as it could encourage enterprises to build, supply and transfer greenhouse technique for farming enterprises and households, he added. Director of the State Bank of Viet Nam's Credit Department, Nguyen Viet Manh, pointed out that the bank and the ministries of agriculture and finance were studying and have mapped out pilot policies to credit for high-tech agriculture projects. The pilot programme aimed to reduce input cost by offering preferential loans, Manh noted, adding that the disbursement will give priority to projects that farmers and enterprises were working together in applying high technologies. State Bank Governor Nguyen Van Binh noted that agriculture was a prioritised sector for crediting this year, in particular high-tech applications in agriculture. Till last year, credit for agriculture reached VND672 trillion, nearly 20 per cent higher than that of 2012. Processors look to develop cashew sector More than 250 cashew nut processors from 40 countries around the world gathered at an international conference on May 16 to seek ways of developing the sector. Participants at the conference, which was held in the southern province of Ba Ria-Vung Tau, stated that the cashew nut industry will face a number of challenges in the future, largely due to increased and fierce competition. If processors do not pay due attention in improving the qualitative competitiveness of their products and processing capacities, they will suffer from various pressures, they noted. International Nut and Dried Fruit Council Foundation (INC) Vice President Pino Calcagni stated that Viet Nam should further improve the quality of products as this will allow Viet Nam to easily enter demanding markets and thus make higher profits. According to Pham Van Cong, CEO of the Nhat Huy Joint Stock Company, if Viet Nam continues to export unprocessed raw cashew nuts, the sector will stay on the same dead end path as other agricultural sectors because they have not adequately prepared materials for export. The sector needs assistance from relevant agencies to build a sustainable development strategy for the future, he added. To promote and expand export markets, the Viet Nam Cashew Nut Association has organised a series of meetings and dialogues providing domestic and foreign processors with opportunities to expand cooperation. Last year, Viet Nam exported more than 261,000 tonnes of cashew nut, earning US$1.65 billion, up by nearly 18 per cent in volume and 12 per cent in value. This is the eighth consecutive year Viet Nam has surpassed India to become the world's largest cashew nut exporter. The US, China and the Netherlands remain Viet Nam's major markets. This year, the sector aims to fetch around $2.2 billion from exports. CT Group plans dragon fruit orchard in Australia Vietnamese CT Group plans to create Australia's largest commercial dragon fruit orchard, with the first farm to take shape in the Northern Territory this year. Company president Tran Kim Chung reported that Northern Australia has ideal growing conditions for dragon fruits, and the company is investing US$100 million for the project. Northern Territory Minister for Mines and Energy, Hon Willem Westra van Holthe, noted that the project is expected to provide jobs for an estimated 500 workers. It will bring about economic benefits to both countries, he added. Unlike small farms CT is developing in Viet Nam, it is planning large-scale commercial farms to support supply chains, and the NT is the ideal location for them to carry out the project. First online coffee hypermarket launched in Viet Nam Trung Nguyen Coffee Corporation has today officially launched an online coffee hypermarket for the first time in Viet Nam at cafe.net.vn. The online coffee hypermarket is a most effective tool channel to supply all products and articles related to coffee and is particularly suited to the trend of shopping of young consumers. This is the beginning stage of the business model of the Trung Nguyen coffee hypermarket and is gradually being improved and continues to be developed to meet the diverse needs of consumers. APEC agree to create road map for regional free trade area The 20th Ministers Responsible for Trade Meeting (MRT-20) ended in Qingdao, China, on May 18 with the issuance of a statement agreeing to create a road map for the realisation of a regional free trade area. The statement also expressed support of the multilateral trade negotiation process. At a press conference after the two-day meeting, Chinese Trade Minister Gao Hucheng said ministers also agreed to build an information sharing mechanism on free trade agreements as well as develop a plan to connect all APEC member economies while backing the expansion of financial cooperation and infrastructure development investment. At the meeting, the Vietnamese delegation led by Trade Minister Vu Huy Hoang proposed measures to promote regional free trade while holding bilateral activities to strengthen the relationship between Vietnam and other APEC member economies. On the meeting’s sidelines, Minister Hoang had bilateral contacts with delegates from China, the US, the Republic of Korea and Russia to discuss trade and investment cooperation in both multilateral and bilateral frameworks with the respective countries. The minister also took the occasion to touch upon issues relating to the current situation in the East Sea and reiterate Vietnam’s points of view. According to the minister, many delegations expressed their concern and wished that the tension in the East Sea should be solved by peaceful measures, with respect for international law and the Declaration on the Conduct of Parties in the East Sea (DOC). Boycotts of Chinese products negative way to show patriotism: official A Vietnamese National Assembly official said that recent Vietnamese boycotts of Chinese products shows their patriotism in a negative way. Mai Xuan Hung, deputy head of the National Assembly Economics Committee, said that the boycott goes against trade law and should not be supported. “China currently is a big importer of many Vietnamese agricultural products such as fruit, rice and many others. We must clearly recognise that the Chinese people themselves are not guilty. The culprits are those who ordered the installation of the oil rig in Vietnamese waters, breaking international law. It is just and proper to show our patriotism at this time, but it must be done in a careful and intelligent way. There is no reason to refuse Chinese products.” “Vietnamese pepole are known for their friendliness and hospitality, and in any case, we have to keep this tradition. We must meet this belligerence with measured, cultured behaviour. The boycott of Chinese products will have a negative impact on Vietnamese people in the long run,” he added. According to him, Vietnam should continue its efforts to bring worldwide attention to the subject and show its resolute determination to preserve national sovereignty. Recently, a three-star hotel in Nha Trang City refused to receive Chinese guests. A pub in the same city also did the same with a notice that “We will not serve Chinese until the Chinese government withdraws from Vietnamese territorial waters.” In Hanoi, many supermarkets and shops have taken Chinese products off the shelves. Many people also set up forums to protest the Chinese violation as well as boycott Chinese products. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR